Investors suffer as listed companies keep mum: analysts

Fund manager
John Abernethy
has accused regulators of allowing listed companies to release unclear or scant information to the market to the ­detriment of small investors.

The criticism follows a market release by Perth-based
Mineral Resources
on Monday concerning the sale of two ore-processing facilities to
Fortescue Metals Group
.

The sparse announcement did not contain the sale price or its impact on earnings for Mineral Resources.

The Australian Financial Review understands broking houses were able to clarify the sale price and work out the balance sheet impact after seeking clarification from Fortescue.

Fortescue did not disclose the sale price but it “did show us how to work it out" from its annual accounts, one broker said.

Those seeking information were told to work out the sale price of the assets – the sale agreement is considered commercial in confidence – by looking at the finance lease disclosed in Fortescue’s June 30 report.

Mr Abernethy, who is the chief investment officer at Clime Asset ­Management, said it appeared that Mineral Resources had outsourced its disclosure obligations.

“The public are at a disadvantage – the guy on the street is a lackey," he said. “There should be no need for clarification. It should be clear."

“It is clear that both analysts and journalists were aware of the value of the finance lease which is easily established through reference to our previous disclosure."

‘In keeping with expectations'

Mineral Resources’ market releases on Monday attracted attention after several broking houses released identical valuations on the sale price of two Christmas Creek ore processing facilities, despite there being no mention of a price in the releases.

There is no suggestion Mineral Resources selectively briefed broking houses. Analysts spoken to by The AustralianFinancial Review said the $300 million price they published to their institutional and wealthy clients was in keeping with their in-house expectations, even if the ability to clarify how to work out the sales price did help. The ability of analysts at investment banks to obtain that insight raises the question of whether the market was fully informed.

Mr Abernethy said the ability of ­analysts to seek clarification clearly disadvantaged retail investors who don’t have that same access.

“Does Mineral Resources really believe that the market is operating on a fully informed basis?" Mr Abernethy asked. “I think we have a situation where there is no proper regulation of announcements by the ASX or [the Australian Securities and Investments Commission."